Gold prices traded in a tight range around US$2,650 during Thursday's Asian session, as the market shifts focus to the upcoming U.S. nonfarm payrolls (NFP) report.
Despite an initial boost from Federal Reserve Chair Jerome Powell’s comments overnight, the precious metal failed to sustain its gains, with the U.S. dollar and Treasury yields staging a modest recovery.
By 3:35 pm AEDT (4:35 am GMT) spot gold was trading $2.77 or 0.1% lower at US$2,647.50 per ounce.
Gold's price uptick on Wednesday was driven by Powell’s remarks at the New York Times DealBook Summit, where he stated, "Growth is definitely stronger than we thought, and inflation is coming a little higher."
He also noted that the Fed could "afford to be a little more cautious as we try to find neutral", referring to interest rate adjustments.
While Powell’s comments sparked hopes of a soft economic landing and buoyed Wall Street indices, they also dampened the safe-haven appeal of the U.S. dollar, briefly lifting gold prices.
However, market expectations for a 25 basis-point interest rate cut in December remain steady at 77.6%, according to the CME Group’s FedWatch Tool.
Ahead of Friday’s crucial NFP report, traders are likely to remain cautious. ADP data released Wednesday showed that the US private sector added 146,000 jobs in November, falling slightly short of the 150,000 expected.
Gold prices also remain sensitive to developments on the geopolitical front. In the Middle East, an adviser to U.S. President-elect Donald Trump indicated efforts to broker an Israel-Gaza ceasefire deal before the administration's transition on January 20.